2013 QCCQ 3271, 2013 QCCQ 3271

Unofficial English Translation Perron c. Agence du revenu du Québec 2013 QCCQ 3271 COURT OF QUEBEC “Administrative and Appeal Division” CANADA PROVINCE OF QUEBEC DISTRICT OF QUEBEC “Civil Division” No.: 200-80-004940-118 DATE: March 28, 2013 ______________________________________________________________________ PRESIDED BY: THE HONOURABLE JACQUES TREMBLAY, J.C.Q. ______________________________________________________________________ RENÉ PERRON Plaintiff Represented by: Mtre Louis Sirois (box 212) Sirois, Tremblay & Associée, avocats v.

AGENCE DU REVENU DU QUÉBEC Represented by: Mtre Sylvain Lacombe (box 1129) Larivière Meunier Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The plaintiff (Perron) contests the notices of assessment received from the defendant (ARQ) for the 2005, 2006 and 2007 taxation years. Perron asserts that he was a resident of the Province of Alberta during that period. THE FACTS [ 2 ] Perron is an engineer. He has been working on various construction sites since 1982, sometimes outside Quebec.

In 2001, he worked in Windsor, Quebec. In 2002, he moved in order to work in Montreal East. From June 2004 to April 2005, he carried out income- generating activities in Sept-Îles for Alouette. [ 3 ] Not liking the work environment for a project manager in Quebec, he went to Alberta in May of 2005. He has been a permanent employee of Nexen since then. His employment is stable, and he plans to end his career there in 2017. [ 4 ] In 2005, he was renting an apartment in the vicinity of Fort McMurray and then in Calgary. He also purchased furniture. [ 5 ] He has been married to Johanne Lapointe since 1985.

He is neither divorced nor separated pursuant to a judgment or a written agreement. He is the father of a son who was 15 years old in 2005. [ 6 ] Perron co-owns a residence in Beauport with his spouse Johanne Lapointe. His son lives there with his mother. There is no hypothec charging the property. Each month, he deposits amounts ranging from $1,500 to $2,000 into a joint bank account. His spouse uses these amounts to pay living expenses for her son and maintenance on the residence. [ 7 ] Johanne Lapointe has an annual income of about $25,000. She therefore has not bought out Perron as co-owner.

She paid for the cost of electricity and telephone services that were billed to Perron for the Beauport dwelling until 2009. [ 8 ] Perron has a savings account in Alberta. He has paid the health care tax in that province since 2005. He kept his Quebec driver’s licence and health insurability until 2009. [ 9 ] The address related to his credit cards is still in Quebec. He pays them by Internet. He is still a member of Quebec’s order of

engineers but he is also a member of the Alberta order. [ 10 ] He returns to Quebec every three months for periods of four or five days each time. Overall, he spends about a month and a half in Quebec each year. In this way he maintained contact with his son, who was very much in need of his father from 2006 to 2009. Perron regularly resides in Beauport when he returns to Quebec, without resuming his relationship with his spouse, however. [ 11 ] Until 2009, he owned an automobile in Quebec. He had planned to give it to his son, which he did on October 30, 2009.

He recently bought his spouse a new vehicle for $37,000, however. [ 12 ] In 2012, Perron still had his management company Consultants Perron-Perreault Inc., which listed that its head office was in Beauport (D-9). ISSUES IN DISPUTE 1st question : Given the presumption of validity of the tax assessments for 2005 to 2007, did Perron establish prima facie evidence of tax residence in Alberta? 2nd question : Did the ARQ prove on a balance of probabilities that Perron’s principal residence was in Quebec during the years from 2005 to 2007?

ANALYSIS AND DECISION 1st question : Given the presumption of validity of the tax assessments for 2005 to 2007, did Perron establish prima facie evidence of tax residence in Alberta? [ 13 ] As a result of the statutory presumption stated in

section 1014 of the Taxation Act , [1] the burden of proof rests on Perron. [ 14 ] Perron established that he has worked permanently in Alberta since the spring of 2005. He does not plan to return to Quebec for several more years. [ 15 ] Having established that his remunerative employment has been in Alberta since 2005 and that he was present in Quebec only to maintain contact with his minor son during the years in question, Perron established prima facie evidence of tax residence in Alberta, thereby shifting the burden of proof. [ 16 ] In 9027-5967 Quebec Inc. v.

Deputy Minister of Revenue of Quebec [2] the Court reiterated the consequences of the presumption of validity of the notice of assessment on the burden of proof: [ translation ] [13] In Durand v. Quebec (Deputy Minister of Revenue) , the Court reiterated the rules concerning the presumption of validity of a tax assessment and the burden of proof arising therefrom. Retaining the principles set forth by the Supreme Court in Hickman Motors Ltd. v. Canada , the Court said: - Tax assessments are presumed valid under

section 1014 of the Taxation Act but the taxpayer may rebut this presumption. - The initial burden on the taxpayer is to “demolish” the accuracy of the presumption by making a prima facie case. - When a taxpayer presents such evidence, the burden of proof is shifted. - The tax authority must then rebut the prima facie case and prove the assessment that had been established by presumption. [14] As a general rule, prima facie evidence is defined as evidence sufficient to establish a fact until evidence to the contrary. In Stewart v.

M.N.R. , Cain J. states that “A prima facie case is one supported by evidence which raises such a degree of probability in its favour that it must be accepted if believed by the Court unless it is rebutted or the contrary is proved.” (Citations omitted) [ 17 ] With his stable employment in Alberta and the limited nature of his return visits to Quebec, notably to maintain his family relationships, Perron therefore met his burden of proof.

The ARQ must now prove on a balance of probabilities that his principal residence is in Quebec. 2nd question : Did the ARQ establish on a balance of probabilities that Perron’s principal residence was in Quebec during the years from 2005 to 2007? [ 18 ] The Court of Appeal [3] stated: [ translation ] [23]

Section 22 of the Taxation Act , which subjects an individual residing in Quebec to income tax, does not define the concept of residence. As a result, its determination concerning a taxpayer is a matter of fact assessed on the basis of several factors ( Deputy Minister of Revenue of Quebec v. Roy , [1979] R.D.F.Q. 37 , at 39 (C.A.) ): Among the factors to be considered, Reeder states the following: a. past and present habits of life;

b. regularity and length of visits of the taxpayer in the jurisdiction asserting residence; c. ties within that jurisdiction; d. ties elsewhere; e. permanence … of stay abroad.

The taxpayer’s intention and the reasons for his stay abroad may also be taken into account. [ 19 ] The authorities consulted still refer to the 1946 judgment of the Supreme Court of Canada, in which Kerwin J. wrote: [4] There is no definition in the act of “resident” or “ordinarily resident” but they should receive the meaning ascribed to them by common usage. and Rand J. added: [5] The gradation of degrees of time, object, intention, continuity and other relevant circumstances, shows, I think, that in common parlance “residing” is not a term of invariable elements, all of which must be satisfied in each instance. [ 20 ] The Honourable Judge François Bousquet [6] for his part summarized the tests applicable to the determination of residence in the following way: [ translation ] [12] The tests may be summarized as follows: The taxpayer must have a residence for income tax purposes.

The residence is determined on a factual basis as a function of the taxpayer’s general lifestyle. When the taxpayer divides his time among several places, the Court must determine where his main establishment is situated.

To that end, although the list is not exhaustive, the Court must consider the taxpayer’s life habits, the regularity and length of his or her visits to the place of residence, the reasons for stays elsewhere and the connections to the places where he or she stays. [ 21 ] The Court has looked at the decision in Paradis Larrivée [7] and believes that this case may be distinguished from that one because of the large number of connections that Perron maintained in Quebec and because he never tried to sell his Beauport residence, which he used personally during his visits. [ 22 ] The ARQ has proved on a balance of probabilities that Perron maintained his tax residence in Quebec during the years from 2005 to 2007. [ 23 ] The ARQ first demonstrated the unbroken connection with Quebec, which was undoubtedly Perron’s fiscal residence until 2005.

He maintained his ownership of a residential property in Beauport. He used it as the mailing address for many services (electricity, credit cards, etc.). He kept his Quebec health care insurability. He had bank accounts there and made investment trades in Quebec. He kept his Quebec driver’s licence in effect until 2009. He regularly spent time in Quebec in the years from 2005 to 2007, about a month and a half each year, spread over several trips. [ 24 ] Second, Perron maintained a marriage bond with a resident of Quebec. His minor son remained in Quebec, where he was a student.

When he returned to Quebec, Perron occupied a portion of the residence he owned in Beauport. In addition, Perron adduced no evidence corroborating his separation from his spouse Johanne Lapointe. [ 25 ] Perron deposited substantial amounts into a joint account accessible to Johanne Lapointe, amounts which she used to cover her son’s and her own day-to-day expenses as well as maintenance costs for the residence. Recently, Perron gave her an automobile of considerable value for her personal use. [ 26 ] Third, Perron did not prove that he was firmly established in Alberta, apart from his employment there.

No major purchase or stable emotional relationship indicated that should his work end, he would continue to stay in Alberta. [ 27 ] The Court believes that from 2005 to 2007 Perron’s connecting and belonging factors are still largely in Quebec. FOR THESE REASONS, THE COURT: DISMISSES the notice of appeal of René Perron dated October 18, 2011, concerning the notices of assessment bearing numbers QA167055E00, QA167056E00 and QA167057E00; THE WHOLE with costs.

__________________________________ JACQUES TREMBLAY, J.C.Q. Mtre Louis Sirois (box 212) Sirois, tremblay & associée, avocats For the plaintiff Mtre Sylvain Lacombe (box 129) Larivière Meunier For the defendant Date of hearing: December 7, 2012